The Bubs Australia Ltd (ASX: BUB) share price is shooting higher today after announcing a new supply agreement with supermarket giant Coles Group Ltd (ASX: COL).
At the time of writing the infant formula and baby food company's shares are up 10% to 98 cents.
What did Bubs announce?
This morning Bubs announced that it has entered into a new supply agreement with Coles under which Bubs Organic Grass Fed Infant Formula will be distributed to 482 Coles supermarkets.
Initial orders are to be processed in mid-May, with its products expected on-shelf in early June.
This is in addition to its existing agreement for Bubs Goat Milk Infant Formula (which is ranged in 561 stores) and Bubs Organic Toddler Snacks (which is ranged in up to 804 stores).
Bubs' founder and chief executive officer, Kristy Carr, said: "This is a continued vote of confidence in Bubs brand portfolio from Coles and demonstrates Bubs strong performance in the super-premium specialty infant formula segments, and confidence in the capability of our vertically integrated supply chain to meet our commitments under the new supply agreement."
Mrs Carr believes this makes Bubs a strong contender in the super-premium category alongside the likes of A2 Milk Company Ltd (ASX: A2M).
"Moreover, this agreement with Coles establishes Bubs as a significant participant in the super-premium organic infant formula category. With such strong penetration across all major retail points of distribution in the Australian grocery and pharmacy sector, we are confident the Bubs Organic range will support continued portfolio-wide growth in our domestic volume as we continue to build awareness and trust in the Bubs brand with Australian parents," she added.
Management also advised that its agreement with fellow supermarket operator Woolworths Group Ltd (ASX: WOW) has been further increased. Its Bubs Organic Grass Fed Infant Formula will now be available in 800 stores and its Goat Milk Infant Formula will be available in 654 stores. This compares to its previous ranging of 700 stores and 400 stores, respectively.
Baby Bunting agreement.
In addition to the Coles agreement, Bubs has entered into a new supply agreement with baby products retailer Baby Bunting Group Ltd (ASX: BBN).
This agreement will see the retailer range a total of 16 products in 52 stores throughout Australia. Initial orders have already been processed and products are expected to be on-shelf and online in May.
Combined with its Coles and Woolies agreements, management expects its domestic revenues to be given a material boost in the fourth quarter.
